Earlier today, Wal-Mart announced it will provide free shipping on more than 60,000 online items during the holidays with no minimum purchase required.
This is big news for anyone in the e-commerce sphere. As Dow Jones Newswire reports:
"For the largest retailer in the world to lay down the gauntlet makes everyone in retail have to think about how what they offer compares," said Noam Paransky, retail strategist at Kurt Salmon Associates. "I would say at this moment retailers are evaluating just how economically they can provide something, or something similar, to what Wal-Mart is doing.'
It appears that free shipping is becoming to online shopping what zero percent financing is to the auto industry. If you need a boost in sales, flip that switch. (To illustrate how dependent that kind of relationship can become, an auto analyst once described zero percent financing to me as 'crack for car companies.')
And with the U.S. consumer so skittish, many retailers are turning that light on. A survey released today by Stamps.com found that 64 percent of respondents said free shipping, with or without minimum spend, is the most effective promotion they can offer during the holiday season, and more than half will be offering free shipping on more products this year compared to last holiday season.
The strategy, of course, can wreak havoc on margins. If that shipping cost isn't coming out of the consumer's pocket, it's coming out of yours.
But, in addition to increased sales, there's another upside: 52 percent of the Stamps.com survey respondents who use free shipping with minimum spend report their average order size increases by at least $4.
Perhaps the scariest thing for online shop operators is that shoppers don't just love free shipping; they expect it. A ComScore survey cited by Dow Jones found that 55 percent of shoppers said they would abandon their cart if free shipping was not offered.
So I hope you've got lots of bulbs, because it looks like this light might be on for a while.
News leaked today that Google is giving all its employees a generous 10 percent salary bump (See more on the story in the Inc.com reporters' blog).
Here's an analysis of what it means from the Business Insider's Henry Blodget:
'Well, first it suggests that Google is still an awesome place to work. Given that employee retention has been a problem, it also suggests that Google is now going the extra mile to keep its employees happy. Lastly, it suggests that the company's financial performance continues to be very strong.'
I believe all those things are true, but the move also highlights something else: it says the biggest weapon Google has against competitors like Facebook when it comes to attracting and keeping talent is cash it already has on hand. The promise of a giant, future equity payout has sailed away from Google employees.
While Google no doubt supplies a hefty paycheck to its workers, because of its already sky-high stock price (roughly $620 a share as I write this), it can't offer the sort of eye-popping creation of wealth that something like an IPO can.
Programmers are the lifeblood of a tech company. They're going to want to go where they can have the most freedom, biggest impact -- and reap the financial rewards of their work. So Imagine you're a young, hotshot programmer at Google who joined after it went public. You are paid very nicely, but you sit in a position previously held by someone who has already cashed in her millions and moved on to the next adventure. Plus, the secretary might be worth more than you ever will be. Facebook and Twitter might look just a little appealing.
For its part, Google insisted in an internal memo that its workers want the cold hard cash:
'We've heard from your feedback…that salary is more important to you than any other component of pay (i.e., bonus and equity). To address that, we're moving a portion of your bonus into your base salary, so now it's income you can count on, every time you get your paycheck.'
That may very well be the case, but I would add 'salary is more important to you than any other component of pay that Google can offer.' Send that survey around to Facebook employees and I'd wager you'd find a few more that would love additional equity instead.
This attraction-of-talent problem isn't just at the programmer level. In 2007, Google went searching for a new CFO. You'd think it would be one of the more glamorous positions in the finance world, but it took Google a year to fill. The hire, Patrick Pichette, wasn't some tech world superstar, but the president of operations at Canadian telecom giant BCE (formerly Bell Canada). I'm in no way trying to insinuate anything bad about Pichette, who is by all accounts a very fine executive, but the choice was considered something of a head-scratcher given his rather staid background. Recruiters I talked to at the time believed the lack of a big upside in Google's stock limited the candidate pool.
Contrast that with Facebook, which went hunting for a CFO last March. That search was completed in just a few months and returned David Ebersman, who by age 38 had already served as CFO of biotech pioneer Genentech for four years. Impressive stuff -- and probably the kind of resume you'd expect from a Google hire in, I don't know, 2003.
Is your business prepared to embrace Groupon, the website that distributes daily coupons to its 20 million subscribers, if it comes to your town? Well, you might want to get ready.
Bloomberg News is reporting that the Chicago-based company is seeking venture funding that may value it at $3 billion.
Groupon has said it expects to serve 300 markets by the end of this year, up from the 230 or so it currently reaches. The latest round of funding could help the site bulk up its sales staff to sign on local businesses, Bloomberg said.
(For a primer on how Groupon works and how it could spur sales at your business see this Inc. article.)
Since its founding just two years ago, Groupon has raised $170 million from investors. Its last round, led by Mail.ru Group in April, gave it a $1.3 billion valuation. Other investors include Facebook backer Accel Partners and New Enterprise Associates.
Groupon's success has attracted more and more competitors, including LivingSocial and Groop Swoop, and copycats, especially overseas. The rapidly growing site has also started experimenting with deals outside of local small businesses, running its first national deal for Gap in August.
In addition to obvious investor interest, one venture capitalist speculated to Bloomberg that an acquirer could snap up Groupon in the coming months.
There's really no disputing it: Mobile is a big part of the future of commerce. At the same time, mobile, so far, has been a bit disappointing in that area.
In the U.S., outside of ringtone and music downloads, people don't buy much with their phones – and they certainly don't use it as a payment device. For whatever reason, Europe and Asia have been much more welcoming of the technology when it comes to making purchases.
Still, many big name and deep-pocketed corporations are making bets in this area, like eBay with PayPal and Google with its payment system.
And now it looks like Apple is ready to step in. Earlier this week, an unconfirmed report popped up from TechCrunch that Apple and Google have been courting San Francisco start-up Boku, whose technology allows consumers to charge purchases to their mobile phone bills. The appeal is probably not so much the technology, but the existing relationships Boku has with several mobile carriers.
I, however, don't find this report/rumor quite as sexy as one that surfaced last week about a potential partnership between Apple and Gemalto NV, a Dutch company that makes mobile phone SIM cards and payment cards with embedded chips.
Boku, for its part, is currently relegated to the digital realm. But Gemalto offers Apple a chance to compete in a very different space. American Banker writes:
'But having Boku in its arsenal would not by itself give Apple the ability to do point of sale payments in a brick-and-mortar environment, which is "where the real battle will be fought," said Richard Crone, a payments consultant. A relationship with Gemalto could help bring that capability into the physical retail world.'
Up until now, merchants, as the American Banker points out, have been resistant to bringing a new piece of hardware into their stores, especially since adoption of mobile pay technologies has been so slow. But now imagine if that was a piece of aesthetically pleasing, easy-to-use Apple hardware. And given the proliferation of the iPhone, it might be a piece of hardware that actually gets a good deal of use.
Another angle intriguing me is where the big credit card payment networks -- Visa and MasterCard -- fit in. It seems to me this could reduce the number of transactions they process. If that's the case, this technology could ultimately put pressure on the fees they charge merchants, which would certainly be welcome.
- Skullcandy Joins the IPO Party
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- Groupon Growing Up, Hires CFO
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